History Of Relationship Marketing

• Relationship Marketing

Relationships marketing is a strategy that attempts to establish, develop, enhance, and maintain relationships and involve people over the long term so that they are loyal and supportive of the organisation.

The Emergence of Relationship Marketing as a Key Strategy -

Relationships marketing is currently seen as the dominant and most effective approach to the marketing of services. It is said that it is the biggest shift in the development marketing for fifty years. It is especially relevant to non-profit and service organizations such as schools, but it can equally apply to goods and industrial marketing. While it is regarded as a new term it is in reality an old phenomenon. It is a rediscovery of an ancient practice

“those organizations that depend heavily or exclusively on personal selling, and that reward sales agents for (a) buying products, (b) selling products, and (c) finding other agents to buy and sell products”

2. A sales system under which the salesperson receives a commission on his or her own sales and a smaller commission on the sales from each person he or she convinces to become a salesperson.

Basically, this type of business is associated with direct selling, but it is actually more than that. Most multi-level marketing activities include recruiting members, selling, and earning commissions on whatever sales the person under you transacts.

History

The origin of multi-level marketing is often disputed; but multi-level marketing style businesses existed in the 1920s, 1930s with Nutritive or California Perfume Company renamed as “Avon Products”, 1940s with the California Vitamin Company, 1960s, and even as late as the 1970s.

MLM CONCEPT -

1. It is common knowledge that MLM works on the concept of time leverage. A work to be done by you in 100 days can be completed in one day if you have 100 people under you ( in a chain ) doing one day’s work. You earn a % of incentive for the work done by each of these 100 people. Though it is given various names like Network marketing, freelance marketing, chain marketing (money chain in a negative sense), the basic principle is that a happy consumer brings in more customers for which he is getting an

There is a restriction that one member A can directly appoint only 2 members under him (B and C or Right and Left). He can invite further members, but they have to be put under B or C. this is applicable to all members and this creates a situation where a member is forced to help the down-line while expanding his own business. The following diagram explains the network expansion sequence. The first member A can enroll only 2 members B and C. If he gets another prospect D, he has to enroll him under B or C (here it is under B). There are some more rules like balanced expansion of Right and Left sides of the diagram for which more incentives will be applicable. The % of income from each addition at lower level comes down, but by the time, the network would have expanded considerably to get good over all returns. Normally when the total size of down-line reaches 50 or 100, income levels will be in lakhs of rupees. Sometimes, there is a cap on maximum monthly earnings. All payments are net of Income Tax deducted at source and hence Governments also get a share of the earnings indirectly. Company has a parallel income network where low value items like news magazines, movie tickets, theme park tickets are also offered for sale through the members. This is called daily income scheme, which keeps their income clocks